Ditching Debt

Student loan repayment programs are an excellent perk attached to pursuing public service -- if agencies choose to use them, that is.

Some agencies use loan repayment as a tool to lure talented workers into government jobs and keep them there. Since 2002, agencies have had the authority to grant up to $10,000 a year for a total of $60,000 in student loan repayments in return for a promise of at least three years of service.

The benefit is optional, however, and if agencies decide to offer such a program, they must request the flexibility during the annual budget process, according to Nancy Kichak, associate director for strategic human resources policy at the Office of Personnel Management.

So how do you know if you're lucky enough to work at an agency offering loan repayment?

You could start by asking your manager. If the student loan benefit applies, managers should offer the incentive as part of efforts to attract or retain employees, Kichak said. Many agencies target such benefits to a particular occupation or set of occupations, she said.

But you may not want to stop there. "What we are finding is that a lot of our managers and a lot of our [human resources] folks might not even know about these programs," said Marta Perez, chief human capital officer at the Homeland Security Department.

Perez said she has launched training to ensure that managers are fully aware of all recruitment and retention flexibilities that exist at the department. "We're working on our managers," she said. "The message is we need even more and more of these [programs]."

Overall use of the benefit is growing.

According to a recent OPM report, the number of federal employees receiving student loan repayment benefits increased 31 percent from fiscal 2005 to fiscal 2006.

An important part of continuing that growth is making sure agencies are aware such flexibilities exist. But even then, 22 agencies have reported that budgetary issues and tax liabilities associated with loan repayment are a major impediment to using the flexibility, according to OPM.

Also keep in mind that federal educational incentives do not end with off-setting college debt. DHS recently launched its own graduate academy, offering a tuition-free graduate education in exchange for two years of service.

Lawmakers also are jumping on board to highlight the importance of educational incentives. Some proposals aim to offer student loan repayments to employees in public health professions, while others would allow repayment programs to be offered on a tax-free basis.

Additionally, the House recently approved major college aid legislation that would provide loan forgiveness to government workers after 10 years of service.

But Kichak said OPM does not believe such a program would be as effective as the current offering. "We're very proud of our program, and we think it's effective," she said. "We don't see a need for one that has a 10-year window before it becomes effective."

According to OPM, the top agencies to use student loan repayments last year were the Defense, Justice and State departments, the Government Accountability Office and the Securities and Exchange Commission.

"We would expect the usage of this program to continue to increase," Kichak said. "The issue in every agency is that the number of retirements is going to continue and peak, and this is the kind of tool that will really help them deal with that issue."